The inevitable disaster of having ideologue politicians tell business what their long-term interests should be

You don't want to live in a country where the government thinks it's smarter than business

I used to tell this “joke” of sorts when, years ago, I was frequently confronted with questions about our intelligence community following 9/11. Shouldn’t we have a strong intelligence system that could have prevented that tragedy?

My response would go like this:

• I like my intelligence people dumber than my military leaders, because I’ve seen places where that isn’t true (Pakistan, Soviet Union) and you don’t want to live there.

• I like my military leaders dumber than my politicians, because Ive seen places where that isn’t true (pick any right-wing military junta in history) and you don’t want to live there.

• And, I like my politicians dumber than my business leaders, because I’ve seen places where that isn’t true (pick your favorite single-party state, mine currently being China and Indiana) and you don’t want to live there.

Hence, I don’t worry about my intelligence community underperforming, because any nation’s resilience is better located elsewhere — please!

ESG (environment, social, governance) and DEI (diversity, equity, inclusion) are two broad movements that began in the business world. They represent business coming to grips with major structural changes in the world economy.

These two business guideposts also represent business thinking about long-term profitability — as in, their business survival in an increasingly competitive global economy.

ESG and DEI are not social engineering and they’re not “soft hearted.” At their core they represent hard-nosed adjustments to reality.

Let me explain.

First, on DEI: the future of the global economy in terms of investment, growing consumption, and shifting supply/value chains is INHERENTLY …

• Less American than rest of the world

• Less White than rest of the world

• Less Christian than rest of the world

• Less European than rest of the world

• Less Western than rest of the world.

These are not social goals; these are market realities staring Western businesses in the face.

If you want your business to survive and thrive in years ahead, you have to accept these realities and figuratively get inside them by encouraging DEI both within your ranks (to be one is to know them is to sell to them) and throughout your company’s customer-facing operations. Fail to do this and you will lose to non-Western companies already doing increasingly well around the world.

The global middle class stood at about 2B in 2000 — still significantly defined by Western populations, tastes, desires, realities.

That global middle class doubled to 4B by 2020 — and became far less identified and shaped by Western identities and values.

It will grow to 6B by 2050 and, at that point, be overwhelmingly post-Western.

If your Western or American business can’t get a grip on these realities as they progressively unfold, it will lose markets — plain and simple.

The same story applies to ESG.

My book, America’s New Map, dissects three major structural changes in the world order this century:

1. Climate change (environment)

2. Demographic aging globally — and America’s specific racial transformation (social)

3. The emergence of a majority global middle class whose very existence triggers a re-run of the same competitive ideological dynamics that we saw in the West when its middle class arose at the turn of the 20th century: Is it rule from the left (socialism)? Rule from the right (ethno-fascism)? Or does the middle rule itself (democracy?) — all of this speaking to, and ultimately determining, world order this century (governance).

Thus, in both instances (DEI, ESG), America’s business instincts are wholly correct, timely, and strategic in their ambitions — exactly what they should be.

So, what is the response of the traditionally business-friendly Republican Party? They want to proscribe to business what their corporate values and operational ethos and strategic goals should be.

We all know how well governments tend to perform in such things — abominably.

But the MAGA GOP is willing to sacrifice our nation’s economic health and ambitions to serve their culture war requirements. Thus, we get the idiocy of GOP governors in states experiencing the most profound of these changes (e.g., Texas, Florida) basically pretending like they don’t exist, or, if they do, they can be solved by culture-war legislation (Strike the very words from our laws!, intones Big Brother) — a great deal of which is now winding its way through the courts that decide everything today since our politicians cannot.

DEI is decidedly popular among the American people, despite all the right-wing culture-war attacks.

Most Americans approve of DEI, according to Post-Ipsos poll: Despite rising tensions over diversity, equity and inclusion programs, about 6 in 10 Americans said they are a “good thing” for companies to adopt.

ESG is likewise supported by a majority of Americans but is plagued by low awareness: Most polled Americans don’t know what it is but generally feel the goals are correct, when presented to them without bias.

Republicans are more aware of ESG because of the demonization efforts within their ranks, where a constant gripe among skeptical investors is that companies are doing all this simply to sell their products better!

What a concept!!!!!

The gap here between America and the rest of the advanced-economy world is great:

While 94% of European and 86% of Asian institutional investors have adopted ESG investing, only 38% of North American institutions are using ESG, with just 32% of U.S. asset owners employing it.

No surprise there: European business gets it. Asian business gets it. But America? Our politicians and political activists, representing an intolerant minority, are too busy with our self-immolating culture wars to embrace these unfolding business realities. They would prefer our economy suffer and shrink so as to maintain their preferred racial, ethnic, and religious identities as central to America’s collective identity.

This is choosing color over country.

What is an “intolerant minority”? We go to Nassim Taleb for the concept:

The best example I know that gives insights into the functioning of a complex system is with the following situation. It suffices for an intransigent minority –a certain type of intransigent minorities –to reach a minutely small level, say three or four percent of the total population, for the entire population to have to submit to their preferences. Further, an optical illusion comes with the dominance of the minority: a naive observer would be under the impression that the choices and preferences are those of the majority. If it seems absurd, it is because our scientific intuitions aren’t calibrated for that (fughedabout scientific and academic intuitions and snap judgments; they don’t work and your standard intellectualization fails with complex systems, though not your grandmothers’ wisdom).

Thus, America and American business are suffering the damage wrought by an increasingly intransigent/intolerant minority — the MAGA GOP.

If we let them win, we will live in a country where politicians have more say over how business is conducted than business leaders themselves.

And that will sideline America in the superpower brand wars of this century, where our ability to attract loyal buyers/subscribers/the-democratically-minded will drastically outrank our ability to project military power — much less sanction the entire world in an attempt to correct its evolutions.

This intolerant minority is not making America great again. It is ruining it and threatens our entire business culture.

This is why we are seeing much of American business simply abandon the terms DEI and ESG while keeping their content in place. That is very good news, indeed.

Take a look at Russia’s economy (hopefully with more skepticism than Tucker Carlson could mount) and politics and ask yourself, Is this from where and whom Americans should be taking their ideological cues at this point in globalization’s evolution?

Because, if your answer is yes, then you are deeply lost.

America did not win the Cold War only to become KGB officer Vladimir Putin’s pathetic clone, nor does America take its cues from the likes of Hungary.

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